The cost of family health coverage in the US now tops $20,000 a year, an annual survey of employers found. That’s a record high which has pushed an increasing number of American workers into plans that cover less or cost more, or forced them out of the insurance market altogether.
While employers pay most of the costs of health coverage, according to the survey, workers’ average contribution is now $6,000 for a family plan. But that’s just their share of upfront premiums and does not include co-payments, deductibles and other forms of cost-sharing once they need care – which added up to over $20,000 in this year’s survey.
“It’s as much as buying a basic economy car, but buying it every year,” said Drew Altman, the CEO of the Kaiser Family Foundation. The nonprofit health research group conducts the yearly survey of coverage that people get through work, the main source of insurance in the US for people under age 65.
The inexorable rise of costs has led to deep frustration with US healthcare, prompting questions about whether a system where coverage is tied to a job can even survive. As premiums and deductibles have increased every year in the last two decades, the percentage of workers covered has slipped as employers dropped coverage and some workers chose not to enroll.
Here’s a chilling fact: Fewer Americans under 65 had employer health coverage in 2017 than in 1999, according to a separate Kaiser Family Foundation analysis of federal data. That is despite the fact that the US economy employed 17 million more people in 2017 than in 1999.
“What we’ve been seeing is a slow, slow kind of drip-drip erosion in employer coverage,” Altman said.
Employees’ costs for healthcare are rising more quickly than wages or overall economy-wide prices, and the working poor have been particularly hard-hit. In firms where more than 35% of employees earn less than $25,000 a year, workers would have to contribute more than $7,000 for a family health plan. It’s an expense that Altman calls “just flat-out not affordable.”
Here’s another chilling fact: Only one-third of employees at such low wage firms are on their employers’ health plans, compared with 63% at higher-wage firms, according to the Kaiser Family Foundation’s data.
And another: Deductibles are rising even faster than premiums, meaning that patients are on the hook for more of their medical costs upfront. For a single person, the average deductible in 2019 was $1,396, up from $533 in 2009. While raising deductibles can moderate premiums, it also increases costs for people with an illness or who get hurt. The bottom line is, cost-sharing is a tax on the sick and the injured.
The latest Kaiser survey is based on responses from more than 2,000 randomly selected employers with at least three workers, including private firms and non-federal public employers.
Under the Affordable Care Act (Obamacare), insurance plans must cover certain preventive services such as immunizations and annual wellness visits without patient cost-sharing. But patients still must pay out-of-pocket for other essential care, such as medication for chronic conditions like diabetes or high blood pressure, until they meet their deductibles.
Many Americans simply aren’t able to pay these ever-increasing deductibles and other out-of-pocket expenses. Almost 40% of adults can’t pay an unexpected $400 expense without borrowing or selling an asset, according to a Federal Reserve survey earlier this year, and it’s been that way for a long time.
After years of pushing healthcare costs onto workers, some employers are pressing the pause button. Delta Air Lines, for example, recently froze employees’ contributions to premiums for two years, CEO Ed Bastian said in an interview last week. He added:
“We said we’re not going to raise them. We’re going to absorb the cost because we need to make certain people know that their benefits structure is real important.” He said the company’s healthcare costs are growing by double-digits. The Atlanta-based company has more than 80,000 employees around the globe. But Delta is just one example.
At the end of the day, the US spends more money than any other country on healthcare, yet life expectancy is shorter and the rate of maternal and infant death is higher. The reasons include: higher drug prices, higher salaries for doctors and nurses, higher hospital costs and higher prices for many medical services.
No doubt, healthcare spending in the US is out of control. The question is: What can we do about it? The answer is complicated but it’s not Medicare For All which would just make matters worse, in my opinion, and further bankrupt the country.
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